Summary
RMC No. 21-2025 clarifies the tax treatment of Joint Ventures and Consortiums formed to undertake construction projects under Section 22(B) of the NIRC, in relation to RR Nos. 10-2012 and 14-2023, and their registration requirements under Section 236.
Key points
- Not taxable as a corporation. The joint venture must be for a construction project, pool resources of local contractors licensed as general contractors by the PCAB of the DTI, and be itself licensed by the PCAB. Joint ventures with foreign contractors qualify only if the foreign member has a special PCAB contractor license and the project is certified as foreign financed or internationally funded with international bidding allowed. Without any one requirement, it is a taxable corporation.
- Disqualified arrangements. Mere suppliers of goods, services or capital are not included. Agreements among real estate developers, with land owners, LGUs or GOCCs, between non-contractors, or between contractors and non-contractors are disqualified.
- Registration. All joint ventures and consortiums must register with the BIR under Section 236. Each joint venture agreement gets a separate TIN as head office, and construction projects get a branch TIN at the RDO of the project location. Non-construction joint ventures register as head office only, and a change in composition makes a new joint venture needing a new TIN.
- Taxes and withholding. Gross payments to a joint venture not taxable as a corporation are not subject to the two percent (2%) Creditable Withholding Tax but are subject to twelve percent (12%) VAT. Co-venturers report income on their distributive share based on the Annual Income Tax Return, subject to fifteen percent (15%) Creditable Withholding Tax, with an exception for certain Japanese ODA-funded projects with a Japanese contractor co-venturer.
- Other rules. Joint ventures withhold 1% on payments to suppliers of goods and 2% on suppliers of services. A net operating loss is deductible by the co-venturer in proportion to share, and licensed contractors on projects exceeding 12-months must enroll in eFPS.
- Returns and deregistration. Taxable joint ventures file BIR Form No. 1702-RT or 1702-MX and non-taxable ones file BIR Form No. 1702-EX, with Audited Financial Statements. Joint ventures deregister after project completion, and one cancelled within two (2) years may apply for a cash refund of unused input tax under Section 112(B).
Who is affected
- Joint Ventures and Consortiums in construction projects
- Licensed contractors who are co-venturers
- Real estate developers and non-contractors forming joint ventures
Deadlines and effectivity
- Registration is required for all joint ventures regardless of purpose
- Issued March 24, 2025
Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.
Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.